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Assets under management at UK-domiciled funds fell by more than £100bn (€107bn) last year despite increased inflows from retail investors, according to new figures from industry body the Investment Management Association, as investors put more money into bonds than at any time in at least a decade.

The value of assets at open-ended UK funds fell by 23% to £360.7bn last year, from $467bn at the end of 2007, while overseas-domiciled funds fell from £18bn to £16.1bn, according to the IMA’s figures.

The fall came despite an increase in the value of net retail sales in the UK from £380.1m to £1.5bn over the year.

Bonds attracted large inflows of £3bn in 2008, in contrast to equity funds, which had net outflows of £1.6bn.

A higher percentage of assets under management are now placed in bond funds, with 20.9%, and balanced funds, with 8.3%, than at any other time since the IMA statistics were first compiled in 1999. Balanced funds invest across both equity and debt asset classes.

The best selling funds were those that invested in sterling-denominated corporate bonds, which attracted £1.5bn of inflows. The least popular were European equities funds, excluding the UK, which posted outflows of £2bn in outflows.

Richard Saunders, chief executive of the IMA, said: "2008 was a torrid year for investors, and this is reflected in the wide swings in net sales experienced during the year.

"At different points, investors were putting money into different asset classes, seeking the best investment opportunities. But the year ended on a positive note with healthy inflows in both November and December as investors started to put money into both equities and bonds."